State of Illinois
91st General Assembly

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 1        AN ACT concerning insurance claims practices.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5.   The  Illinois  Insurance Code is amended by
 5    changing Section 154.6 as follows:

 6        (215 ILCS 5/154.6) (from Ch. 73, par. 766.6)
 7        Sec. 154.6.  Acts constituting improper claims  practice.
 8    Any  of the following acts by a company, if committed without
 9    just cause and in violation of Section 154.5, constitutes  an
10    improper claims practice:
11        (a)  Knowingly  misrepresenting to claimants and insureds
12    relevant facts or policy provisions relating to coverages  at
13    issue;
14        (b)  Failing  to  acknowledge  with reasonable promptness
15    pertinent communications with respect to claims arising under
16    its policies;
17        (c)  Failing to adopt and implement reasonable  standards
18    for  the  prompt  investigations  and  settlement  of  claims
19    arising under its policies;
20        (d)  Not  attempting  in good faith to effectuate prompt,
21    fair and equitable settlement of claims  submitted  in  which
22    liability has become reasonably clear;
23        (e)  Compelling   policyholders  to  institute  suits  to
24    recover  amounts  due  under   its   policies   by   offering
25    substantially  less  than the amounts ultimately recovered in
26    suits brought by them;
27        (f)  Engaging   in   activity   which   results   in    a
28    disproportionate number of meritorious complaints against the
29    insurer received by the Insurance Department;
30        (g)  Engaging    in   activity   which   results   in   a
31    disproportionate number of lawsuits to be filed  against  the
                            -2-                LRB9113007JSpc
 1    insurer or its insureds by claimants;
 2        (h)  Refusing   to   pay   claims  without  conducting  a
 3    reasonable investigation based on all available information;
 4        (i)  Failing to affirm or deny coverage of claims  within
 5    a  reasonable  time  after proof of loss statements have been
 6    completed;
 7        (j)  Attempting to settle  a  claim  for  less  than  the
 8    amount  to  which  a  reasonable  person  would  believe  the
 9    claimant  was  entitled,  by  reference to written or printed
10    advertising  material  accompanying  or  made  part   of   an
11    application  or  establishing  unreasonable caps or limits on
12    paint or materials when estimating vehicle repairs;
13        (k)  Attempting to settle  claims  on  the  basis  of  an
14    application which was altered without notice to, or knowledge
15    or consent of, the insured;
16        (l)  Making   a  claims  payment  to  a  policyholder  or
17    beneficiary omitting the coverage under which each payment is
18    being made;
19        (m)  Delaying the investigation or payment of  claims  by
20    requiring an insured, a claimant, or the physicians of either
21    to  submit  a  preliminary  claim  report  and then requiring
22    subsequent  submission  of  formal  proof  of   loss   forms,
23    resulting in the duplication of verification;
24        (n)  Failing  in the case of the denial of a claim or the
25    offer of  a  compromise  settlement  to  promptly  provide  a
26    reasonable  and  accurate  explanation  of  the  basis in the
27    insurance  policy  or  applicable  law  for  such  denial  or
28    compromise settlement;
29        (o)  Failing to provide forms necessary to present claims
30    within 15 working days of a request with such explanations as
31    are necessary to use them effectively;
32        (p)  Failing to adopt and implement reasonable  standards
33    to verify that a repairer designated by the insurance company
34    to  provide  an  estimate,  perform repairs, or engage in any
                            -3-                LRB9113007JSpc
 1    other service in connection with an insured loss on a vehicle
 2    is duly licensed under Section 5-301 of the Illinois  Vehicle
 3    Code;
 4        (q)  Failing  to  provide  as  a  persistent  tendency  a
 5    notification on any written estimate prepared by an insurance
 6    company  in connection with an insured loss that Illinois law
 7    requires  that  vehicle  repairers  must   be   licensed   in
 8    accordance with Section 5-301 of the Illinois Vehicle Code;
 9        (r)  Refusing  to  pay  a  claim  on the basis of alleged
10    fraud or intentional loss on the part of the insured  in  the
11    absence of clear and convincing evidence;
12        (s)(r)  Engaging in any other acts which are in substance
13    equivalent to any of the foregoing.
14    (Source: P.A. 90-340, eff. 8-8-97.)

15        Section  99.  Effective date.  This Act takes effect upon
16    becoming law.

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